Mon, February 06, 2023

Dollar goes below the 16-month peak

Nvidia reported results that surpassed expectations

On Thursday, the dollar went below a 16-month peak in Asian trade, decreasing in value against the New Zealand dollar after falling against the yen and the pound. It happened overnight as traders evaluated if the U.S. dollar’s recent surge was about to delay.

On Thursday, the New Zealand dollar surged 0.39% to $0.7024 after the central bank survey showed expectations of near-term inflation to increase in the fourth quarter.

The day before, the sterling surged 0.7% against the dollar to a one-week high. It happened after a report of Britain’s October inflation. It pressures the Bank of England to hike rates in December at its meeting.

The British currency, last seen at $1.3503, rose slightly today.

On Thursday, the dollar went down to as low as 113.87 yen against the Japanese currency. However, it seemed still in sight of Wednesday’s 4-1/2-year high of 114.98.

On Thursday, the euro was at $1.1328, failing near a 16-month low.

Earlier this week, robust U.S. retail sales data fueled the dollar’s current rally. It started last week following a strong U.S. inflation print propped market bets. According to analysts, the Federal Reserve might have to raise rates around the middle of 2022.

On Wednesday, the dollar index (measuring the currency against a basket of six rivals) hit its highest since the middle of the year (2020) at 96.227.

However, FX strategist at Pictet Wealth Management, Luc Luyet, said that the current dollar strength’s sustainability (beyond the next few months) seems far from certain.

He added that market expectations of the Fed seem to become hawkish. Those expectations suggest limited tailwinds for the U.S. currency going forward from this factor.

However, others detected the dollar’s decline in value as a great chance to buy.

Analysts at Westpac said in a note that anything into the low-95s seems like a buying opportunity.

Other assets

Oil prices, which fell to six-week lows, hit commodity currencies.

The Canadian dollar was at a six-week low of 1.2623 per U.S. dollar. Markets anticipate that the Bank of Canada will start increasing interest rates from the beginning of the following year.

The Australian dollar is also at a six-week low of around $0.7265.

In crypto, on Tuesday, Bitcoin started to decrease in value 0.7% showing at around $60,000. Last week on Wednesday, it touched a record $69,000 but started falling below that level this week for the first time in November.


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